Lawsuit Seeks To Change How NCAA Athletes Are Compensated

Lawyers representing former and current college football and men’s basketball players in an anti-trust lawsuit indicated for the first time last month that they will seek to collect billions of dollars in damages from the NCAA and its Division I schools for using the athletes’ images, names and likenesses. Additionally, the suit will seek to fundamentally change how athletes are compensated for playing these sports in college. In seeking certification of the lawsuit in U.S. District Court in California as a class action, a motion was filed in which it was stated that while monetary damages were being sought on behalf of former athletes, compensation wasn’t being sought for current student-athletes “while they maintain their eligibility.” But rather the suit seeks to put monies generated by the licensing and sale of class members’ names, images and likenesses in trust until the current athletes end their college playing careers.

The suit, initially filed in May 2009, is against the NCAA, video-game maker Electronic Arts, and the nation’s leading collegiate trademark licensing and marketing firm, Collegiate Licensing Co. The named Plaintiffs in the suit include former basketball stars Ed O’Bannon, Oscar Robertson and Bill Russell. The Plaintiffs allege that the Defendants violated anti-trust law by conspiring to fix at zero the amount of compensation athletes can receive for the use of their names, images and likenesses in products or media while they are in school and by requiring athletes to sign forms under which they relinquish in perpetuity all rights pertaining to the use of the names, images and likenesses in ways including TV contracts, rebroadcasts of games, and video game, jersey and other apparel sales.

Under anti-trust law, the statute of limitations on damages is four years back from the date of filing. The athletes’ lawyers have been seeking to collect information about the revenues of the NCAA and Division I schools and conferences from TV contracts and from the licensing and royalties related to video-game sales from 2005 to present. Those revenues are said to be in the billions. This recent filing references an accompanying sealed report from one of the Plaintiffs’ experts, Roger Noll, an economics professor emeritus at Stanford who has written on the business of sports. He has provided a method of “determining how this revenue would be allocated between colleges and student-athletes in the absence of the restrictions that the NCAA imposes.”

The method set out by the expert, according to the filing, “is based on a 50-50 split for telecasts and a one-third split for video games, based on recognized economic principles, examples from professional sports, and examples from music artists’ licensing.” It then entails “equal allocations among all members of a team in a given year, and these team members are then further divided according to whether they were current or former players at the time that the revenue was generated.” On September 1st, the NCAA issued a statement from Donald Remy, the association’s executive vice president and general counsel, which said:

The NCAA does not make any attempt to prevent former student-athletes from selling or licensing their ‘collegiate likeness,’ nor has it ever done so. Unable to prove their original claims regarding former student-athletes, plaintiffs have now abandoned those claims and are attempting to assert new claims on behalf of current student-athletes. Unfortunately, this about face runs them smack into a very old argument, and one that the NCAA has defeated in court many times. . . . We are confident that plaintiffs will find no more success in this case than they have in past cases.

It will be most interesting to see how this case comes out. If the plaintiffs are successful, without any doubt it will change the face of college sports forever. I have been a little surprised that this litigation hasn’t received more media attention.